Jazeera Airways K.S.C.P. (JAZEERA) Earnings Call Transcript & Summary

Hello, everyone. This is Hatem Alaa from EFG Hermes, and welcome to Jazeera Airways Full Year '21 Earnings Call. I'm pleased to have on the call today, Rohit Ramachandran, the company's CEO; and Krishnan Balakrishnan, CFO. We'll start by a presentation from management, and then we'll open the floor for Q&A. [Operator Instructions] Rohit, please go ahead.

Good afternoon, and for those of us from North America, good morning. Thank you for joining us today on the Jazeera Airways earnings webcast for the fourth quarter as well as the full year 2021 results. It appeared as of 2021, and COVID refused to let us go without a final farewell. And as we had a small challenge towards the end of the year, which I'm sure you're all aware of related to Omicron, a temporary challenge to travel that signals the end of an era, hopefully. Good riddance. Amidst all the positive vibes, I'm glad to communicate to you that a very important development took place late yesterday, which actually caused me to change our presentation a little bit, where the government of Kuwait announced a new significant relaxation of travel restrictions as now all vaccinated residents are no longer required to have a PCR test or quarantine, along with further easing for those who are even not vaccinated. And we really don't need to elaborate on the importance and significance of such a step in the path to pre-COVID travel normalcy. 2021 was a bumpy year. The first 2 quarters, as you remember, were amongst the worst in the history of aviation and also on that of Jazeera. However, we are all glad that we convened today to discuss the year in retrospect, feeling satisfied and even optimistic to be where we are today as the second half of the year finally rewarded our composure and efforts of the previous 18 months. For that, we thank everyone in the Jazeera team. We thank our passengers. And indeed, we thank our partners and investors for the confidence you have shown in this company that is reflected in the current market cap of Jazeera. From our end, we will continue our commitment to put in the same efforts, exhibit the same strategic and commercial acumen, support and grow our community and, above all, create value for shareholders. As you know, we have a lot on hand to discuss today, and I would like to allow for enough time to take your questions at the end. So with that, let's move together to Slide 8. We start with a review of our fourth quarter, full year 2021 operational performance. During the last quarter, Jazeera carried 520,000 passengers against only 90,000 in the fourth quarter of 2020, a very healthy growth given the circumstances, albeit it being from a very low and distorted base. However, a very positive one, as it signifies a shift from one era to another. As mentioned earlier, there was a small hiccup towards the high season of Christmas as well as New Year, but that was overcome fairly quickly. The ease of restrictions during the quarter meant that there was more supply than the demand, driving prices slightly lower from their peaks in the third quarter, which, in turn, opened the market up for new segments of passengers that previously could not afford the high ticket prices, especially for large groups of travelers and families. Load factor for the quarter have returned to the healthy range of a little over 74%, higher than the 54.5% of last year, reflecting more eagerness to travel as the market corrected itself. In a similar fashion, aircraft utilization stood at 9.2 hours, up from 2.9 hours in the fourth quarter of 2020. Again, more evidence of normalcy coming about. Yields, however, were lower for the same reason that drove them higher in the fourth quarter or even in the third quarter of 2021, which is the very simple economic rule of supply and demand. The easing restrictions meant there is more supply and options available for passengers that signal the change in the rules of the game from a price-driven demand to a volume-driven demand. On Slide 9, you can see the full year operational performance. As you're aware, the blended numbers don't look as great as the third quarter -- the fourth quarter, that's mainly driven by the first half of the year. Again, we are proud to report improvement in every KPI that we monitor, as you can see here. We saw increase in the number of passengers, improvement in our load factor and utilization, in addition to support from the higher yields realized during the year. Moving on to the following 2 slides to discuss our financial performance and look at the fourth quarter financial headlines, where you can see the pandemic story unfolding over the period of 12 months in 2 separate phases. Jazeera reported a revenue of KWD 33.1 million, up from KWD 8.6 million in the third quarter of 2020, with a 285% increase. Operating profit came in at KWD 9.3 million against a loss of KWD 8.9 million last year, while net profit registered KWD 7 million compared to a net loss of KWD 10.9 million in the comparable period, a number that I noticed wasn't much expected by the market. For the full year, Jazeera happily reports a twofold revenue growth of KWD 80.4 million and a return to profitability at the operating level, with an operating profit of KWD 10.8 million compared to an operating loss of KWD 20.7 million last year. Similarly, net profit came in at KWD 7.1 million compared to a net loss of KWD 26.4 million in the previous year. When we recall that the first half cumulative loss was KWD 11.7 million, to close the year with a net profit of KWD 7.1 million is extremely satisfying, truly the story of 2 eras. In this slide, you will see 2 revenue streams that we always pay special attention to because of their added value and the attractiveness of the margins. I'm glad to report a very decent growth in our ancillary and cargo operations on the quarterly as well as annual basis. In the coming 2 slides, we will discuss our interesting operations in the Jazeera Terminal T5 that have also witnessed great improvement during the fourth quarter as well as the full year compared to the previous year. Not only has life returned to the terminal, bringing back a gradual resumption to all revenue streams, but more importantly, the implementation of the passenger service charge since July has generated very significant and material revenue. During the fourth quarter, a period when the charge was fully implemented, T5 reported a revenue, EBITDA and net profit that are not only higher than fourth quarter 2020, but also higher than fourth quarter 2019 when our operations were in full force. This, in our opinion, signifies the beginning of a time when the airport operations and management business will truly start to go hand-in-hand with the airline business. The forward thinking of Jazeera and the vision of its Board that started 5 to 6 years ago in terms of investing in this sector is finally starting to pay true dividends, and that only encourages us to develop and expand it. As you can see in Slide 14, the less cyclical and more regulatory contribution to revenue is now taking the driver's seat and will only continue to grow as Jazeera carries more passengers year after year. To that end, we are continuing our expansion in the current terminal to be able to accommodate a larger capacity and provide more services to our passengers. We use the slow period of 2020 and early 2021 to successfully negotiate several meaningful expansions that add physical space or facilitate the flow of arriving, departing and transit passengers. We successfully added 5 more gates, expanded the arrivals area, added new baggage belts and redesigned several areas such as passport control to facilitate and accelerate the movement of passengers. Further expansions are under ongoing advanced negotiations and development, and we are very glad with the response we are seeing from the aviation authorities. Today, our terminal can carry up to 4 million passengers annually, and we will be looking to add more to that capacity on a yearly basis. I will also announce a game-changing initiative in this area on our next call. In this section, we discuss our operational performance during the year. As you can see, we have launched several new routes targeting active segments, as discussed earlier, namely, we started London, Bishkek, Sarajevo, Yerevan, Tashkent, Antalya, Colombo, Addis Ababa and Almaty, in addition to resuming flights to Beirut and Tbilisi, while frequently flying to the Turkish holiday destinations of Istanbul, Bodrum and Trabzon. Our network today covers 40 active destinations, which is a healthy and stable network for an airline of our size. Our fleet expansion is still in place, as you can see in Slide 20. Our fleet now consists of 9 A320neos and 8 A320ceos, after taking delivery of an additional brand-new A320neo during the fourth quarter for a total of 4 new aircraft during the year, bringing our current fleet to 17. We see this a suitable and sustainable number to digest during the year of 2022, with the potential to expand if the market demands it. In other words, we'll be taking no new deliveries during this year in order to consolidate and digest all the growth that we took last year. On the same note, I'm glad to inform you that we have signed a very lucrative deal with Airbus for the purchase of a total of 28 airplanes that will totally renew our fleet over the next 5 years and take us to the fleet size we announced before, on an earlier call, that is in the range of 35 airplanes. The deal, in our opinion, is a very beneficial one given our long-term relationship with Airbus and very favorable market conditions that rarely repeat once in every prolonged cycle. This purchase will not only renew our fleet, but will also provide cost efficiency in terms of adding the larger A321neo to our fleet, lowering the unit cost per passenger as well as effective savings. A question that I will no doubt be asked is, how do the terms -- the commercial terms of this deal compare with the rest of the market? And I will go into more detail when we have that discussion later in this presentation. I would pause now and just look back on the many conversations that we have had over the course of the years, particularly some tough circumstances that we had over the last 2 years when the majority of our operations were curtailed and suspended, and there was a very legitimate concern all around about what we plan to do to navigate through the crisis that we've just passed through. And I think it's important to summarize the fact that we took those responsibilities very seriously. And I think, in this slide, I have summarized what I call delivering on our promises to stakeholders. We implemented immediate decisive measures to safeguard the financial position as well as liquidity, including the suspension of the 2019 dividend, which, no doubt, was painful after waiting the drawdown of bank facilities that were not previously tapped and renegotiating the entire cost structure with suppliers, particularly aircraft lessors. We maintained a healthy cash balance through very strict cost control. And I will actually spend a little time talking about cash because I think, by the end of this presentation, you will see that Jazeera has now become a cash-generating machine. Jazeera also completed a capital increase in the 9th month of last year as a precautionary step, purely precautionary step, to adhere to regulatory capital requirements. We focused on alternative sources of revenue during the suspension of commercial flights to ensure continued revenue streams. And we also launched a number of profitable new routes in a very challenging environment as well as postponed deliveries of airplanes that were due in 2020. We postponed them to 2021. All this helped to ensure that we come out of this healthier and stronger than when we went into the COVID crisis. In this slide, we can see how Jazeera investors have rewarded the focused value creation efforts and the commitment to safeguarding and involving the company by its Board and the management. It's perhaps time to remind ourselves of the several discussions we used to have back in 2018 and 2019 about Jazeera's expansion plans or the potential of its terminal and the collaborative growth opportunities for the Kuwaiti aviation market, how we not only create value for Jazeera's shareholders, but for the entire sector, the community and, in fact, the economy of the state of Kuwait. One of the studies that we did, it implied 11x economic multiplier for every KWD that we invest in the business in Kuwait, the Kuwait economy gets 11x benefit of that dinar spent. Having said all that, we are now looking at the future with more aggressive expansion for both the airline and the terminal business, while still keeping our close focus on the bottom line. We find ourselves now in the middle of a step change, a change of gears. From being a well-run small airline, we are now evolving to a well-run medium-sized airline. And that requires a slightly different approach, more focus, and I will cover some of the initiatives that we are doing during that transition as we go along. But being the experts that you are in your line of business, I will leave these numbers here for you to assess and evaluate. I can add to that discussion the exact amount of cash, the cash return that Jazeera has paid back to its shareholders since inception, and that is in excess of KWD 18 million today, about 4x of our capital. And by the end of this process for the distribution of this year's dividends, if approved by shareholders, that number will grow to KWD 91 million. Our business plans show that by 2025, just the cash position of the company at that time, even assuming normal dividend payments. will be almost KWD 150 million. Clearly, as I mentioned earlier, a cash-generating machine. For 2022, we start the year on a positive note after yesterday's announcement as travel will now resume with much more ease for passengers, which is kind of an invitation for segments that have not traveled so far to get them to start traveling. Our fleet will remain the same with the option to grow at short notice, if needed. And we will add new destinations to our network in 2022. This will see us further expanding into Eastern Europe as we gradually add destinations in Mainland Europe according to our long-term network plan. We are spending particular focus in expansion regionally as well. You will see, during the course of the year, strong expansion and growth into secondary cities in Saudi Arabia as well as the South Asian subcontinent. You'll see some of the destinations that we'll be going on this list. This is an important slide and ties very well with what I spoke earlier about the step change. To further strengthen the operational and financial future of the company, we have set up a number of subsidiary companies. Jazeera Terminal T5, of course, is the largest and most important, and it is set up under a company called Sahaab. We have also set up a duty-free company, which took over the operations of T5 Duty Free, with effect from the 1st of December of last year. This company has already posted 2 consecutive months of profit. We received approval and certification from Kuwait DGCA to set up what we call an Approved Training Organization, which is a training company for pilots and cabin crew. On one hand, this will ensure a steady pipeline of trained talent for our operations. But more importantly, this will also be an independent profit-generating subsidiary, which means that all the training that is being conducted are charged and that adds to the bottom line of the subsidiary. VIV, which is really a spectacular experience, and for those of you traveling in and out of Kuwait, I highly recommend that you try it. It's very much on the same lines as Windsor Suites in London. It's a premium travel experience at Kuwait Airport, which caters to not just T5 but also T1, T4 and also private jets. It has increased its operations and now catered into a lot more clients. This is expected to be an important addition as well to the profitability of Sahaab. There are additional subsidiaries which have strong business plans and also add to the value chain of Jazeera itself. They are under development and consideration at this time. And in due course, I will let you know more details as and when they are established and begin operation. With that, I complete my section of the presentation and hand it over to our CFO, Krishnan, who will now present the financial section before we move to the Q&A. Krishnan, over to you.

Thank you, Rohit. Good afternoon to everyone. So here, you can see the picture that we have on the screen is of our VIV terminal, which Rohit just spoke about. We will go on to the first slide on the financial section. The capital increase, as we discussed in the last quarter, was conducted in July. And we raised KWD 10 million, KWD 2 million was the share capital and about KWD 8 million was the share premium. The shares were issued at 500 fils a share. And the KWD 8 million share premium was adjusted against all the carryforward losses, as approved by the shareholders in September. I will go on to the next slide. So we have the KPIs relating to the quarter 4 of '21 as compared to quarter 4 of '20. As you can see, everything has moved positively, except for the yield. All the parameters in terms of the size, the capacity, the seats, the passenger numbers, the seat factor, everything was better, including utilization. The yield, of course, was lower. As Rohit already mentioned, fourth quarter of '20 was an exception. So the yields were very high during that period during COVID. Moving on to the next slide, the performance in terms of revenue and costs. You will see that operating revenue went up by 286%, primarily because there was an increase, of course, in the operation itself, plus also the higher seat factor that we experienced in the last quarter of '21. Of course, the yield was not as good as fourth quarter of '20. But even after that, the increase was about 285%. On the cost side, the costs were marginally higher, I would say, comparatively, only 64%, and because of the pure increase in the operations and also the fuel price increase, which went up by about 77% fourth quarter '21 versus fourth quarter of '20. So the margin was about 255% better than the previous year. I will touch up on the balance sheet in a later slide. So I'll move on to the next slide now. The fourth -- for the full financial year, as you can see, the parameters, everything was better in the financial year '21 as compared to the financial year '20. The number of destination cities were slightly lower. That is because during the COVID season, we had a lot of flights to -- onetime or 2-time flights to destinations where they were doing some repatriation, the flight charters, so that's why you see the number of destinations are lower in '21. But if you see, compared to the previous 2019 operations, it's much higher. So all the parameters were in our favor, including the yield as well as the load factor and, of course, the capacity. And the utilization also was better by 41%. So moving on to the next slide. If you see, the revenues have gone up year-on-year by about 94%, but that was primarily because, up to June 2021, we were not operating. We were operating very low amount of capacity. From July onwards, there was some easing of restrictions. And as a result, level of operations increased, and our revenues increased. The increase in the yield and the seat factor also helped to increase year-on-year performance. The operating expenses were lower, but that was very marginally higher compared to the previous year. That was again because of the higher level of operations. When the yield in terms of revenue took it up to 94%, our expenses only went up by 12%. In this year, the Board is recommending a cash dividend of 32 fils per share, which would amount to a total amount of about KWD 7.04 million. That will be, of course, taken up in the AGM, which is coming soon. To go to the next slide, to look at the balance sheet movements. Primarily, our assets and liabilities increased because we took 4 aircraft during 2021 and, as a result, the IFRS assets and liabilities increased. The cash balance was KWD 50 million at the end of December 2021 as compared to KWD 20 million that we had in the financial year '20. Yes, the capital increase, the operating profits and the receivables, which have been recovered, have helped us to increase the cash. However, I would like to mention here that we also paid back the loans of about KWD 6.5 million and also paid the deposit, the initial deposit to Airbus of KWD 2.1 million. So if I consider that, the balance ideally would have been KWD 59 million as of end of December '21. We already spoke about the capital increase and, therefore, the changes in the fair capital and the premium. The next slide shows you the fuel movements. That's more by way of information. And with that, I conclude my part of the presentation and hand it back to you, Rohit. Thank you.

Thank you, Krishnan. I'm now open to take any questions that you might have.

[Operator Instructions] We'll take the first question from the line of Nishit Lakhotia.

Congratulations on a fantastic set of results. I just have actually a couple of questions, one on the airline business, the other on the terminal side. The terminal side is more exciting, so I'll start with that. You are saying you will want to expand the capacity to 4 million passengers in the existing terminal this year. How much more can you expand the capacity at T5 before you need a separate terminal itself, where you would want to accommodate your 35 planes strategy? So any color on that? And what was the theoretical limit on this T5 incremental expansion? So first on that. And your passenger service fee almost went up by KWD 1 million or 0.5 million passenger carried in 4Q. So that means if you carry like 3 million passengers this year, that would mean around KWD 6 million in passenger service fee coming to your bottom line? Is that approximately? I know the transit and departure/arriving, that mix matter, but -- and a crude way looking at it from that aspect? And a bit more color on the leasing aspect on the terminals. Where are we in terms of leasing? And how -- area of the air side and land side. That's on the terminal side. And on the airline side of business, 4Q was fantastic. We have seen the yield still remaining very high, and you've made almost KWD 6 million in profit from your airline side pretax. I want to know how you see 2022 where oil prices are so high? And we are already seeing a lot more competitive pressure from many of the airlines giving some really attractive prices. So yields are not going to be there. It's going to normalize, to a large extent, and Jazeera is not hedged right now. So I want to know your view on the profitability of your airline side of business. How do you see that in 2022?

Thank you, Nishit. I counted a total of 6 questions in there, and I will try my best to answer all of them, okay? So let's start with the terminal. And your question about when we will outgrow the limit -- passenger limit capacity at the terminal. Currently, the capacity of the terminal is a little over 3.2 million, 3.3 million passengers. We are doing quite a few structural changes, process flow changes, efficiency changes at the moment before the summer, which would -- including complete separation of arriving and departing passengers, more logical flow of security checks so that there is no duplication involved. We should all put together, take the capacity up to about 4 million this year, and then continuing on with the acquisition of more boarding gates, take it to about 4.5 million by next year, which means that with T5, we should be able to keep pace with the growth of the airline for at least another 2.5 years in this manner. But you are very correct, T5 will not be the permanent home of Jazeera. I alluded to earlier on in my presentation that I would like to, with your permission, keep something to announce in the next investor call that we have. But I can assure you that, that is very much being worked upon. And once we have the new fleet beginning to come in, Jazeera will have a very state-of-the-art new home. That's all I will say on the subject for now. Regarding the passenger service fee, your calculation is almost correct, but a little bit on the low side. So it's a little over 2x, but I won't go into more detail on that at the moment. But based on the split of departing, arriving and transit, it's slightly over 2x. Regarding leasing space, we are 100% fully sold out on the air side. And land side is very quickly filling up as well. As you might imagine, the same way that we went to our lessors asking for relief when there was no operation, the leasing of space and the collection of rents at full levels, it actually suffered a great deal during COVID. And so during the first, I would say, half or maybe slightly more than half of last year, we had to give some amount of relief to our tenants. Of course, that was then wound down over the course of Q3, and we are now back to full levels. On the land side, there are going to be 3 major outlets taking over, including Burger King and Subway. We are also in advanced talks with the largest supermarket chain, very relevant to our demographic, our target demographic, which is likely to take a large area in the land side of the terminal, not only serving passengers but also if you have visited our office, there are no large supermarkets anywhere in the airport area in that whole region. So even people working there, I think, will benefit from a large supermarket. So that's with respect to lease in space. I realized you find the terminal exciting. It is indeed very, very exciting, but it's also important to remember that the terminal gets its life from the airline, which is what pushes the passengers through the entire ecosystem. Coming to the airline, your observation is correct. Oil prices have gone up recently, hovering between $90 and $95 Brent at the moment. And you're also correct, Jazeera is not hedged. And that is a very deliberate initiative. The reason for that is hedging, no matter how sophisticated risk management systems you use when it comes to hedging and no matter what people consider a sure bet, at the end of the day, it's a bet. For us, we prefer 100% guaranteed wins. And what do I mean by that? That is the fuel discounts that we get at our home base, 20% based on the volume that we carry -- that we operate out of Kuwait, that is something that is not a bet. Let's not go this way or that way. That is a guaranteed advantage to the cost structure of Jazeera. The second thing, which I covered before in our earlier calls, is that the late booking trends out of Kuwait and most of our network give us the ability to reprice, which means that if we see fuel going up, we are not locked into advanced bookings, which we have to honor 3 months -- made 3 months ago when the fuel price is very different, which means that now the pricing includes a small premium for the additional cost of fuel, which may not have happened 3 months ago or 4 months ago. With respect to yields, yes, as markets open up, as capacities increase, as competition increases, there may be periods of the year where yields do need to be sacrificed and returned for market share. That is the job of a low-cost airline in order to ensure that even at the lowest prices, our cost structure is so competitive that we make money when others cannot. Having said that, if you look at the next set of holidays around the corner, which is from the 23rd onwards until the 5th, there is a peak out of Kuwait. You might be surprised at the prices that are being sold. It was also the subject of a recent newspaper headline in Kuwait. So it's not a one-size-fits-all. You will find opportunities. You need to drive yields. You need to fight for market share. You need to even out the peaks and troughs. And that's what a strong commercial and network planning team does. I hope I've been able to answer your question.

We'll move to the chat. There are a few questions. First question from Rajat Bagchi. Can you please share the market share for Jazeera in terms of passenger numbers? And any insight in what would be the sustainable market share going forward? And the second question is on yields. What do you think is a sustainable yield given oil prices and recent forecasts around it? Do you expect average yields to go back to 2019 levels, or they should be higher?

Thank you, Rajat. I'm afraid, right now, I don't have the precise market share updated data with me. I should, but the data I have is not yet updated for January. If you reach out to Mostafa, I will ensure that he sends you the latest updated market share. Having said that, the period during COVID and even the last 2 quarters of last year have seen Jazeera really move up when it comes to market share out of Kuwait. There were months when, despite having far fewer airplanes and even fewer flights being operated, Jazeera had the highest market share out of Kuwait International Airport purely because we were carrying more passengers, both point to point as well as transit. In my view, we should aim for at least 1/4 of total passengers carried to, from and through Kuwait Airport and eventually 1/3. But there's still work that needs to be done to achieve those goals. I spent a lot of time talking about yields, answering the previous question. If you have any more questions that have not yet answered about yield, please do let me know.

Question from Mohamad El Masri. What a great turnaround in a recent investor conference earlier in the month. Management mentioned you are in talks with the Kuwaiti government to launch a new terminal. Please comment on the current status, potential capacity, expected completion date at rental space.

Thank you, Mohamad. I'm trying not to let the cat out of the bag yet because it's too premature to go into details. Please bear with me until we've gotten all the Is dotted and all the Ts crossed. And I promise to give you a lot more detail in a subsequent call, perhaps even the next investor call.

I have a follow-up question. When do you expect to separate the terminal and airline operations? And should we expect you to implement a change to the depreciation methodologies?

That's a very interesting question. And I can tell you that, that was also a subject of discussion at the Board meeting recently concluded, a day before yesterday. As a first step, you will notice that we are even creating a corporate structure, where airline and airline subsidiaries sit under Jazeera and non-airline and non-airline subsidiaries sit under the entity called Sahaab. Although at this time, Sahaab is 100% owned by Jazeera. We want to give the Board -- we, as management, want to give the Board the option to study the pros and cons of doing it. But purely from a management point of view, we have adopted this approach for better performance management, for better allocation of cost, more transparency and making sure that each entity, each business unit, regardless of whether it's completely split or not at this stage, is considered in our minds to be completely split. And they have to carry their own weight, and they have to deliver their own targets. So in our minds, it's already done. The Board now has the option. And I do know that it's being seriously considered, and there could be movement in that direction later in the year, but not quite yet.

We'll take the question from the line of Ashish Kumar.

Congratulations on a great set of results. During the question, you said that -- or I think what I heard is that we do not have oil hedging as of now, and you will not be willing to do the hedging in the future. Is that true? That's what it came out?

Well, I've learned in this business never to say never. The fact is my preference is for guaranteed wins. And at the moment, anyway, the way the volatility in fuel price, oil prices is going, it really does not make financial sense to hedge because the cost of the hedge and the counter-party risk that we would need to really pay for is going to be prohibitive. On the other hand, I think we are focusing more on the discounts that we currently get and further discounts on both fuel as well as other operational charges that we have requested the government in terms of support that is currently being evaluated by the government. Any other questions?

Yes, there are a couple more from the chat. One from [ Mohammad El Sunayan ].

Okay.

Maybe ask part of that question, but I'm going to read -- are you expecting yields to further normalize in the second half of 2022? What level of yield is sustainable going forward? The second question is, do you believe there is a risk to the company's fuel subsidy mechanism? Any expected subsidy reforms? And his last question is, do you have any plans to list the terminal operations?

Okay. I think I'll just add one more line on yields because I realized that, that is a variable that definitely is being monitored closely. Yields, I don't see them, even after the reopening of traffic from Kuwait anytime soon in the next few months, going back to 2019 levels. I still believe that they will be slightly higher even in the face of the return to normal operations. And for us, we, of course, as a low-cost carrier, need to ensure that there is the right mix of seat factor and yield that give us the best bottom line. So the way things stand today, I believe yields are going to come under pressure during certain times of the year. During other times of the year, it may surprise you. But I still don't believe that in the next several months, it will go back to pre-COVID levels. That's all I'm going to say on the yield. Regarding what Mohammad called a fuel subsidy, it's really not a subsidy, it's a volume discount that's available to carriers operating more than 5,000 sectors per year from Kuwait. Coincidentally, that's just 2 carriers at the moment. So the short answer to that is no. I don't see any imminent risk associated with which the volume discounts that we get for fuel. Regarding any potential listing of the terminal, again, that's a matter for the Board to decide, evaluate and choose the best course for what's going to be good for the business as well as what's going to be good for shareholder value. As I mentioned, it is being very closely looked at. There is a possibility that an announcement may be made towards the end of the year. But from just allocating of assets point of view, capital allocation point of view, performance management point of view, we are already splitting the businesses within Jazeera and Sahaab in order for us to maximize the return on it.

Thank you. There is one more question from Rajat Bagchi. Can you please highlight some of the structural cost savings would you expect going forward for both the airline and the terminal?

Sure. Great question. And a big, big part of the management's time and the Board's time is to keep drilling down and driving down unit costs. And as we achieve scale, this is going to be even more apparent and even more evident. Let me start with the aircraft order. And perhaps because of the fact that I can't share too many financial and commercial details of the aircraft order, highly confidential, what I can tell you is this is going to be a game changer for Jazeera. Not just that we'll have more planes and, of course, we need more planes as we grow as a business, but the deal that we achieved with Airbus, which began in July of last year, culminated during the Dubai Airshow, is something that many airlines triple our size who have placed orders with Airbus have not achieved those commercial terms. So I can tell you that, as shareholders in Jazeera, you should be very comfortable with the unit cost that we have received in this particular purchase agreement with Airbus. It will bring down our fleet costs by the region of 25%. That's the extent to which the outcome would be as we start receiving those airplanes. The second is we have begun, as we've grown in scale, just 5 short years ago, we were 7 airplanes. And today, we have 17. So we have in-sourced now quite a few things that were expensive before and were outsourced. A good example of that is our line maintenance. And as we grow bigger and bigger, get more airplanes in, these savings are going to pile up because the fixed costs associated with the maintenance organization has now already been put in place. So the variable costs are going to be far lower than what it was in the past and so on and so forth. Training, as you see, is a big win as we grow in scale. These subsidiaries that I spoke of are not only going to pull their own weight, but also plow back into the bottom line of the parent company. In the terminal, the biggest game changer has been, of course, the passenger service charge. But in addition to that, this year, you will see significant revenue flowing through from the leases, from all the other concessions that we have. Our duty-free company, which we own and will generate a profit for Sahaab, in addition to that, pays rent to Sahaab for occupying the space in the terminal. So you can see the transparency with which we have approached all the internal flows of revenue. I hope that answers your question, Rajat.

Thank you. There are no more questions at this stage. So I'll hand it over to you for any concluding remarks.

Thank you, Hatem. I think that was a very comprehensive call. On a personal note, I'm delighted that, last month, I completed 5 years serving this fantastic company. And this is my 20th investor call in those 5 years. It continues to be a great pleasure, and I look forward to many more years of doing this with you all, creating value, building something that all of us can be together proud of. Thank you very much. Goodbye.

Thank you very much, Rohit. Thank you, Krishnan, and thank you, everyone, for participating. Have a good rest of the day. Thank you.